On August 3, 2015, the United States Environmental Protection Agency (EPA) released the final version of the Existing Source Performance Standards (ESPS) component of the Obama Administration’s Clean Power Plan (CPP), setting the first-ever carbon dioxide emission reduction goals for States. Environmental Protection Agency, Carbon Pollution Emission Guidelines for Existing Stationary Sources, 40 CFR Part 60, Docket No. EPA-HQ-OAR-2013-0602, RIN 2060-AR33 (April 3, 2015). When fully implemented by 2030, the CPP is expected to reduce CO2 emissions from the power sector by 32% over 2005 levels. The final version includes significant changes from the original proposal, 79 Fed. Reg. 34829 (June 18, 2014).
Specifically, the CPP establishes CO2 emission rates for two subcategories of existing fossil fuel-fired electric generating units: coal- and oil-fired steam generating power plants and combustion gas turbines (together, EGUs), along with state rate-based and mass-based goals. To support the standard and its implementation at the state level, EPA encourages emissions trading. In fact, while EPA simply allowed emissions trading under the proposed rule, the agency now views it as an integral part of the CPP. EPA still allows states to use a suite of flexible mechanisms to create state-specific compliance programs, though, unlike the proposed rule, certain of these mechanisms will not be federally enforceable.
The CPP has been controversial since its debut 14 months ago. The table below contains a snapshot of the key features of the final rule and deviations from EPA’s 2014 proposal:
Feature |
Final Rule |
Proposal |
ESPS |
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Types of Goals |
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Final State Goals |
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Interim State Goals |
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Best System of Emission Reduction (BSER) |
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Building Block 1: Heat Rate Improvement |
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Building Block 2: Increased utilization of Natural Gas Combined Cycle Units (NGCCs) |
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Building Block 3: Renewable Energy (RE) |
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Building Block 4: Energy Efficiency (EE) |
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Clean Energy Incentive Program |
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State Plan Deadlines |
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State Plan Approaches |
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Federal Implementation Plan |
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Trading Program |
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Reliability |
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EPA also has finalized rulemakings setting carbon pollution standards for new power plants (the NSPS) and for modified and reconstructed power plants. These will be discussed in future posts.
Next Steps
The final rule is accessible at: http://www.epa.gov/airquality/cpp/cpp-final-rule.pdf. States must work with stakeholders to formalize state plans. In the meantime, there will undoubtedly be challenges to the rule